Veracode data indicates that despite increasing security risks from third-party and externally developed software, few enterprises currently have formal testing programs in place. However, there are signs that more organizations are beginning to recognize and address the security risks associated with externally developed applications.

“The widespread adoption of third-party apps and use of external developers in enterprises brings increased risk,” said Chris Eng, vice president of research, Veracode. “In fact, a typical enterprise has an average of 600 mission-critical applications, about 65 percent of which are developed externally, leaving companies increasingly vulnerable to the security risks found in these apps. We are beginning to see signs that enterprises are recognizing and addressing these risks."

"However, organizations still assume too much risk when trusting their third-party software suppliers to develop applications that meet industry and organizational standards. There is still much more work to be done to adequately secure the software supply chain," Eng added.

The supplement found that some of the most dangerous security flaws in existence, such as SQL injection and Cross-Site Scripting, are among the most prevalent vulnerabilities in third-party vendor applications.

The report also showed that while a programmatic approach to software security testing can greatly help enterprises and their vendors mitigate these flaws, few organizations have formal programs in place to manage and secure the software supply chain.

Currently few enterprises have vendor application security testing programs in place, but the volume of assessments within organizations is growing:

Less than one in five enterprises have requested a code-level security test from at least one vendor

However, the volume of vendor-supplied software or application assessments continues to grow with a 49 percent increase from the first quarter of 2011 to the second quarter of 2012.

There is a gap between enterprise standard and industry standard compliance:

38 percent of vendor-supplied applications complied with enterprise-defined policies vs. 10 percent with the OWASP Top Ten and 30 percent with CWE/SANS Top 25 industry-defined standards.

Some of the most dangerous vulnerabilities in vendor applications are also the most prevalent:

Four of the top five flaw categories for web applications are also among the OWASP Top 10 most dangerous flaws and five of the top six flaw categories for non-web applications appear on the CWE/SANS Top 25 list of most dangerous flaws.

Only 10 percent of applications tested complied with the OWASP Top Ten list and 30 percent with the CWE/SANS Top 25 industry standards.

With 62 percent of applications failing to reach compliance on first submission, procedures for managing non-compliant applications are an important aspect of an enterprise’s security policy:

11 percent of vendors resubmitted new versions of applications for testing but are still out of compliance with enterprise policies.

Structured testing programs promote higher participation:

Enterprises that relied on an ad-hoc approach when requesting application security testing averaged four participating vendors, whereas enterprises with a structured approach had much higher levels of success, averaging participation from 38 vendors.

Enterprises with structured programs enabled more vendors to achieve compliance quickly, with 45 percent of vendor applications becoming compliant within one week.

By contrast, enterprises with an ad hoc program only saw 28 percent of third-party applications achieve compliance within one week.

“Today, every organization is an extended enterprise, with third-party software a fundamental layer in the software supply chain,” said Wendy Nather, research director, 451 Research. “It’s critical that organizations develop security policies when purchasing software from outside vendors because of the risks inherent in using third-party applications, yet few are actually demanding security compliance of their suppliers.”

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